x. Addendum: Allocations Under “Food-for-oil”

The United Nations Security Council adopted Resolution 986, “food-for-oil”, on 14 April 1995. The Memorandum of Understanding was signed on 20 May, 1996, by the government of Iraq and the UN for the implementation of SCR 986. Under the first six month period (December 1996 - May 1997) $2.15 billion of total revenue was generated from oil sales (including the pipeline fee). Of the total oil sales, nearly 50 percent ($1.09 billion) were allocated towards humanitarian expenditures⁴⁶:

• $878.4 million for the purchase of humanitarian supplies by the government of Iraq. By May 1997 contracts for only $572 million had been approved by the Sanctions Committee. (Given the population of 18 million persons, the dollar amount per person per month was roughly around $8.13); and
• $215.4 million for the purchase of humanitarian supplies for distribution in the three northern governorates (Dohuk, Erbil, and Suleimaniya) by the United Nations Inter-Agency Humanitarian Program. (Similarly, given the population of 3.08 million persons, the monthly humanitarian amount was $11.66 per person per month.)

The rest of the proceeds were allocated as follows:

• 30 percent to the United Nations Compensation Fund for Kuwait;
• 10 percent for UN operations, including UNSCOM activities;
• 5 percent to cover transportation costs for oil exported via the Turkish pipeline; and
• 5 percent for oil pipeline repair and maintenance.

The purchasing of food, to maintain the ration in the center and south and to introduce it in the north, was the priority under FFO. The total amount of food to be purchased for the first six months was valued at $805 million – $691.3 for the center/south and $113.3 for the north. According to the distribution, the World Food Program was to administer the purchasing of food commodities, monitor the distribution in the center/south, and to distribute the ration in the north. While the monthly food ration under the MOU kept the original items, it increased the quantities such that the current nutritional value of the ration is 2,030 kcal/cap/day (Table A). Despite the increased amount of food, the present ration is unbalanced and insufficient to meet the nutritional needs of the population, particularly those of children and pregnant and lactating mothers.⁴⁷

In the first six months, there were considerable delays in the humanitarian pipeline despite the availability of cash from FFO. The first full ration was not distributed until August 1997, a year after the signing of the MOU. And, less than 5 percent of medical supplies had been delivered to Iraq. The first medical item received in Iraq, on May 9, 1997, was intravenous fluid. However, only 10 percent of what was requested was received and an additional 8 percent was delivered in June. These delays, even for simple humanitarian items, were largely related to the rate at which contracts were approved by the Sanctions Committee.⁴⁸ A large portion of the contracts were either put on hold or blocked. No explanation was provided by the Committee for these delays or rejections.

Although each UN agency because of the FFO agreement has increased its revenue, independent humanitarian, non-FFO, revenue has shrunk over the last six months. This has meant that programs outside the FFO plan have had to shut down

The provisions of FFO were extended for another six months, phase II, on 8 June, 1997 under the UN Resolution 1111 and the distribution plan was approved by the Secretary-General on 4 August.. It was expected that $1.32 billion were to be available for humanitarian supplies. The second distribution plan allocates funds in the same general proportion of 40 percent for central/south Iraq and 10 percent for northern Iraq. The sectoral allocation of funds is presented in Table B.

A special report released by FAO/WFP⁴⁹ assessing the impact of FFO reported that the funds were insufficient to meet the agricultural and nutritional needs of the population.

Table A. Food ration quantity by year (kg per person)

Table B. Allocations to Selected Sectors in Phase II.

Source: Distribution Plan. Resolution 1111. In accordance with the MOU of 20 May 1996.